Dexcom Comes Under Greater Competitive Pressure From Abbott, but There’s Room for Both To Grow

Despite rival Abbott’s recent U.S. regulatory approval for integration of its Libre 2 and Libre 3 continuous glucose monitors, or CGM, with insulin pumps, we don’t anticipate changing our fair value estimate on Dexcom as our initial near-term adjustments weren’t enough to materially shift our valuation. On the whole, we think there is so much potential for the wider adoption of integrated pump and CGM technology that the expanding market will make it possible for both Dexcom and Abbott to see robust growth as category penetration increases among Type 1 and Type 2 diabetes patients. Nonetheless, this latest competitive development underscores the negative moat trend we’ve had on Dexcom, which reflects how both Abbott and Medtronic have raised the competitive heat in the CGM market where Dexcom used to dominate. Abbott’s regulatory approval has just ratcheted up the competitive pressure on Dexcom.